Financial Management and Analysis: Importance, Financial Statements, Ratios, and Case Study Analysis

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Table of Contents
INTRODUCTION...........................................................................................................................1
SECTION 1......................................................................................................................................1
Concept and importance of financial management................................................................1
SECTION 2......................................................................................................................................2
Explanation of major financial statements along with the use of ratios in financial
management............................................................................................................................2
SECTION 3 .....................................................................................................................................3
SECTION 4......................................................................................................................................8
Utilising instance from the mentioned case study describing and discussing the process this
commercial organisation can utilise to amend their fiscal action...........................................8
CONCLUSION................................................................................................................................8
References:.....................................................................................................................................10
APPENDIX....................................................................................................................................11

INTRODUCTION
Financial management is defined as the process which include planning, organising,
directing and controlling the practices related to the finance such as acquisition and usage of
funds of the business organisation. In simple words, it can be defined as the application of
generic principles of management to the financial origin of business firm. Major aim of financial
management is to assure the constant and competent activities of finances to the firm along with
ensuring the sufficient return to the shareholders which is totally based on the earning capacity
(Calafiore and Giudici 2021). This report deals with the value of financial management, concept
of main fiscal statement, usage of financial ratios in financial management. Along with this, it
also include some ratio analysis such as profitability, liquidity and efficiency ratio on the basis of
informations given in the case study. For the purpose of analysing the fiscal performance of
commercial enterprise, business execution review has been also done. This execution review
involve several strategies which are found as necessary for improving the entire performance of a
business organisation.
SECTION 1
Conception and value of financial management
The procedure of planning, organising, controlling and monitoring the resources of
finance in order to attain the goals and objectives of business organisation. It is found as the
perfect activities to control the financial activities of a firm such as risk assessment, proper
utilization of funds, payments, accounting and many more.
Importance of financial management
 Financial Planning: First importance of financial management is financial planning as it
help the business organisation in making the decisions related to the need of finance in
the business unit (FMVA and et. al., 2021). It has been found that the financial planning
acquire a vital area in a business organisation as all the credit of success of a business
goes to the financial planning of company.
 Improve Profitability: The major focus of a business organisation is always on increase
the profitability which is totally based on the proper utilization of funds of business. A
business organisation can improve its profitability by the use of several strong financial
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control devices such as ration & trend analysis, cost-volume-profit analysis, budgetary
control and many more.
 Increase the value of organisation: In order to increase the wealth of investors along
with the business, financial management has its vital role (Terziev and Klimuk 2021).
The primarily objective of a business organisation is to earn high and maximize the profit
which also result in the maximization of wealth of investors. Along with this, it also
contribute in the growth of economy.
 Acquisition of finances: Financial management is related with the learning of needed
finance to the organisation. Acquisition of required funds has a crucial role in the
financial management which also include a possible source of funds with lowest cost.
SECTION 2
Discussion of important financial statements along with the usage of ratios in financial
management
Financial statements are defined as the books which are being maintained by the business
organisation in order to recording all the transactions take place in business. Fiscal health of a
business organisation can be analysed through the financial statement as it include the entire
financial data. Recording all the financial transactions and doing auditing in a proper manner is
the major responsibility of financial manager of a business organisation (HAMMAMI and
ALKHALDI 2021). It is necessary to have authenticity in all the statements published by the
business organisation. Main financial statements are given below:
 Profit and loss statement: It is defined as a book which include summary of cost,
revenue and expenses incurred within a specific period of time. It also provide the
informations related to the abilities of business in order to generating profits through
decreasing cost and improving revenue generation. It helps the business organisation in
understanding the practices which leads to the increase in profitability of organisation
through making several categories of expenses and revenues.
 Income Statement: This statement is useful in developing the result of a business
organisation of a particular time duration for the use of public. A business organisation
can record the inflow of new assets along with outlining the outflow of incurred for
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